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(Bloomberg)—The California Public Employees’ Retirement System, the largest U.S. pension fund, is searching for an infrastructure asset manager to oversee a separately managed account to which Calpers would commit as much as $1.5 billion.

Numerous firms are in the running, according to people familiar with the matter, who asked not to be named because the information isn’t public.

Pension funds are stepping up the use of discrete accounts to lower costs and dictate terms that tend to include longer investment horizons than those in many off-the-shelf funds. New York City’s pension system, which encompasses five retirement plans, last year pledged $3 billion to KKR & Co. to be spread across private equity, infrastructure, real estate and credit investments.

Megan White, a Calpers spokeswoman, declined to comment on the search. The pension fund “will continue to consider expanding its use of separately managed accounts” for its infrastructure portfolio, she said in an emailed statement. In the past 18 months, Calpers has increasingly used such accounts, known as SMAs, in part to gain more control over assets.

Calpers is also exploring alternative ownership structures for its private equity portfolio, which the board is scheduled to discuss at a closed-door meeting on April 16.

Blackstone’s Behemoth

If Calpers and its large peers move to a more-tailored approach for infrastructure investing through SMAs, it could make life tougher for firms like Blackstone Group LP, which is working to raise as much as $40 billion for the biggest-ever infrastructure fund.

At Sacramento, California-based Calpers, infrastructure is a category of real assets, alongside real estate and forestry investments. The roughly $350 billion fund currently has about $4.1 billion allocated to infrastructure, according to filings. Its investments in the sector have delivered it a five-year realized net return of 14.3 percent, beating out private equity, equities and other bets over the same period.

Institutional investors have been eyeing U.S. infrastructure as a growing potential asset class under President Donald Trump, who has proposed spending $200 billion in federal funds over 10 years to spur at least $1.5 trillion in investments for roads, bridges and other public works.

--With assistance from John Gittelsohn.To contact the reporter on this story: Gillian Tan in New York at [email protected] To contact the editors responsible for this story: Daniel Taub at [email protected];Margaret Collins at [email protected] Josh Friedman, Alan Mirabella